You may see Data Compromise coverage included in your commercial insurance package. You may hear whisperings or read articles about a product called Cyber Liability. You may wonder - What’s the difference? Is there a difference? Does my business have an exposure to this? Is my business properly covered? Let’s walk through some of the basics and try to answer these questions.
Data Compromise coverage is a specific first party coverage. In the event of a data breach, an insured’s electronic information may be, well, compromised. A data breach can result in some unexpected expenses - costs associated with breach notification laws, notifying customers, and credit monitoring efforts for customers. Your data compromise coverage will assist with these expenses.
A Cyber Policy typically includes Data Compromise coverage. The form, however, is more robust and addresses some additional first party exposures. Some of these include forensic expenses, data recreation, cyber extortion, loss of business income, and public relations expenses.
One of the key features of a Cyber Policy however, is the liability component. A data breach at your business may result in a third party claim. For example, if sensitive customer or employee information is stolen, you may be sued for damages. Cyber Liability provides both legal defense and coverage for damages.
Data Compromise and Cyber Policy forms can vary greatly. The important thing when considering Data Compromise and/or Cyber Liability coverage is to have an honest discussion with your agent about your exposures and your concerns. From there, you can find a program that is a proper fit.
Megan Corradi MSc, CPCU, ARe